Bruce Springsteen shouted aloud, BORN IN THE USA! and we danced along.
Soon the HMRC will ask: Born in the UK? Dance along our tune and pay Saffa child!
Following the Chancellor Osborne’s Summer Budget, non-domiciled and immigrant taxpayers may feel they are now seen as the golden goose funding the UK financial recovery.
Osborne suggested the final dawn of the tax and IHT benefit flowing from non-dom tax status. He went even further suggesting children born in the UK can no longer claim non-dom status, despite their father being South African domiciled (i.e. UK non-dom).
Born in the UK, is the new non-dom test! If so, dance like any other Brit and pay full UK taxes and IHT on all worldwide income and assets. Asking your rich South African uncle or aunt to bequeath the family farm in Africa to a non-UK trust, will also come under scrutiny Osborne promised.
Not born in the UK: the proposal once you are UK resident for more than 15 out of the past 20 tax years, you be treated as deemed domiciled for IHT and tax purposes.
Previously we alerted readers to the announced earlier, reducing the current seven years claim period for the remittance basis benefits, to three years. This change will no longer happen, it is assumed.
The 2015 budget proposal may then result in £90,000 remittance basis charge applicable to non-doms being UK resident 17 out of 20 years, being scrapped as you will face full UK tax exposure after 15 years.
What does this mean to the average South African living in the UK?
If you arrived in the UK on or before the 1994 elections, you could probably ignore the changes as you have been in the UK +20 years. It is your UK born children you need to be concerned about, as every child born in the UK will soon be deemed the UK domicile from the date of birth. In terms of current proposals, they will face UK IHT at 40% on their South African assets as well as their UK assets.
If you arrive in the UK in 1996 or thereafter you really need to obtain specialist tax advice. Although the proposals are not yet promulgated as tax law, there is no harm in making contact with Breytenbachs Advisory (www.bcbadvisory.com). Alternatively, send an email to firstname.lastname@example.org soonest
There is almost no doubt that over the longer term, the UK government will abolish the Non-Dom status altogether.